I Finally Figured Out Bitcoin

"Bitcoin meets all the OTHER characteristics and traits of a good currency. It's divisible. It's durable (infinitely as it is digital). And it will not decay (again, binary doesn't decay). "

I beg to differ. As you say later in your post, Bitcoin is dependent upon the continued functioning of the Internet, and may also be subject to the whim of governments taking action to ban or tax it. You cannot print those digits out, and have a hard copy Bitcoin, whereas with existing fiat money, I can go to a gold dealer, hand over a wad of currency, and walk out with a wafer of gold.

Bitcoin is the ultimate fiat currency. It has value only because somebody declares it to have value, and it only has value amongst those people who happen to believe the declarer. If I were to offer a car for sale, and somebody offered to pay me in Bitcoin, I'd be rolling on the ground laughing.

Cap, thanks for this! A while ago I read that workers in Spain demanded their wages be paid in bitcoin, because they had no faith in the value of the Euro. The value of bitcoin spiked at that time (and someone I know made quite a bit of money.)

"The makers of bitcoin have limited their supply to 21 million units forever, making it even more scarce."

Something I did not know.

Some folks are unclear on the concept of a place that isn't America. There are upwards of 200 sovereign jurisdictions out there, folks. The Feds may try, but governments will never close Bitcoin down, any more than they will win the War on Some Drugs.

And all that's needed, in the pinch, to keep Bitcoin running, is a cellphone system. Even Somalia and Eritrea manage that pretty well. A situation in the first world where things got as Mad Max as Somalia is now - well, conventional banking systems wouldn't survive that either. In fact Bitcoin, being 100% peer-to-peer - that is, without vulnerable single-point-of-failure servers - might survive rather better.

Captain
What intrinsic value does the American dollar or the Chinese Renimbi or the Euro have? They are essentially colored bits of plastic paper. Yet they function extremely well as currency.

A currency is dependent on the confidence of the people using it for their economic transactions. The support is usually based on the strength of the underlying economy. That requirement has replaced the need for intrinsic value. Currencies are typically as strong as the economy ensuring their value. When people lose faith in their economy they loose their value. Just look at Zimbabwe and its Trillion dollar notes for that.

I posit that Bitcoin works because of the desire of many to use the digital tools of the modern internet economy independent of government interference - as well as the efforts of a few speculators to drive up the value of their stash. To me Bitcoin is the tip of the iceberg of the emergence of a supra national (and I don't me Global) economy. You don't need banks or money changers to transact business from country to country.

Just as the station of presstitution is in decline, could it be that the station of currency and government interference with it is under attack?

"The makers of bitcoin have limited their supply to 21 million units forever, making it even more scarce."

Well, la de da! I hereby announce the creation of the kneebuck, which is so scarce, there's only one of it. And I've got it. And its value is infinite, and it's all mine. Mine, mine, mine! Bwahahaha!

Seriously, though, one of the things that makes money what it is, is not just scarcity, not just intrinsic value, a but general public acceptance that X is useable as money. I don't see Bitcoin ever making that breakthrough; it's just a toy for a relatively small circle of geeks.

The notion that BTC is unworkable because it is dependent on the internet is unspeakably dumb. You know what else wouldn't work if electricity or the internet otherwise went down? EVERYTHING.

BTC has so many advantages over conventional currency I hardly know where to begin. Doesn't inflate. With the right tools, extremely difficult to trace. Low transaction costs. No costs for wiring or remittances at all! Secure! Kills capital controls dead.

I'm looking to buy some BTC ASAP.

Recommended for all very ambitious readers: Ludwig von Mises's seminal masterwork Theory of Money and Credit (1912).

At considerable length he discuses the origin of money which of course arose spontaneously in society as a way around the extremely clumsy practice of barter which requires that two exchangers have exactly coincident needs. Money was not, as many people seem to think, given to us by government.

Mises would be very impressed with gordonkneehill's comical but cogent comment above.
He makes a similar observation albeit without knee's jocularity. The point is that the medium of exchange had to have prior value for it to be widely accepted. Although not "intrinsic value" which is a fiction.

It's absolutely true: Bitcoin is a fiat currency but issued by a private institution not government.
To rely on its promise to never increase the number of units issued is laughably naive.

The miners of gold do not need to make this empty promise. It is virtually impossible to significantly raise production above the normal 3% (?) a year. Gold is truly scarce. Bitcoin is not. It's potential supply is infinite.

"The makers of bitcoin have limited their supply to 21 million units forever, making it even more scarce." Until they make more. Is there an international treaty restricting them making more? Is it just their word or promise. Kinda like obama's word or promise. I would suggest putting your money in a mason jar and burying out by the rear fence. Are you one of those tped boen every minute?

Every time I see the word Bitcoin, my brain wants erase the eye as say "Bit-con".

(What I meant to say was)
Every time I see the word Bitcoin, my brain wants erase the 'i' and say "Bit-con".
(Too bloody late at night for me to be typing.)

Well bitcoins are not completely worthless. I just got an email from Nigeria asking for help in getting them out of the country. I get to keep 50%!!!!! Hey wait a minute they want my help in real money

The fact that criminals and pedophiles like bitcoin for it being untraceable makes me rather wary.